The Day is Coming: We Will Regret Conservative Economics

Conservative U.S. governors who were swept into office during the 2010 liberal-voter-sit-your-lazy-ass-at-home tea party electoral sweep are facing a sad, hard reality check. While a few years ago, by catering to a far-right constituency, they campaigned on pledges of slashing taxes and bolstering business, their subsequent policies have benefited the wealthy but failed to bring “trickle-down” prosperity to their states (read: middle class).images

It is now the morning after the drunken, over-whelming, under-producing tea party. Every single one of those Republican governors are facing, an inactive job market, stagnant (declining in purchasing power)wages, state deficits and impoverished services. The party’s trickle-down ideology is no way to manage a government. And a state cannot be run on tax cuts alone.

Parks and playgrounds go unmown, the individual state coffers are running in first-ever huge deficits, and virtually every other needed government agency is understaffed, underperforming, and losing the ability to perform its mandated services to the citizens of their respective states.

Recent headlines are much different than those in 2010: “Republican governors buck party line on raising taxes,” read a recent headline in The New York Times. “Tax increases a much-regretted necessity for Republican governors,” said another in Bloomberg. “Republican governors are flirting with tax hikes,” the Christian Science Monitor noted.

Conservative governors now recognize the need to generate revenue (wow, really?) to maintain schools and highways. But they are still not taking responsibility and cleaning up the messes they have created. Rather than reversing tax cuts for the wealthy, many are implementing regressive measures that penalize middle-class taxpayers, once-proud and necessary universities are losing their accreditations (see: LSU: 1,400 professors-gone, law-school accreditation-on life support, medical school-dying a slow death, and the same is happening in Kansas, Wisconsin, Michigan, Mississippi, Arkansas).

And yet, the citizenry in each of these states cannot muster the strength to give a damn, much less get out and vote these bums out of office.

“Of the 10 or so Republican governors who have proposed tax increases, nearly all have called for increases in consumption taxes, which hit the poor and middle class harder than the rich,” The New York Times reported last month. This includes new taxes on gas, e-cigarettes, movie tickets and services such as haircuts.

This is Tea Party economics.

For the new tea-party-backed leaders, tax cuts were high on the agenda. Governors such as Michigan’s Rick Snyder and Kansas’ Sam Brownback explicitly said business executives — rechristened by Republican wordsmiths as “job creators” — would see immediate benefits. Snyder pledged “to eliminate the Michigan Business Tax and replace it with a 6 percent flat corporate income tax,” according to The Grand Rapids Press, arguing it will result in “a $1.5 billion tax cut on Michigan job creators.” The night of his victory, Brownback flatly said he was opposed to “taxes on capital formation.”

What Brownback and Snyder, along with Ohio’s John Kasich and Wisconsin’s Scott Walker, were promoting in their states is merely the most recent incarnation of what George H.W. Bush once called “a voodoo economic policy.” George W. Bush called said the Democrat proposals to fund its responsibilities “fuzzy math”. Conservative logic has long held that tax cuts for the wealthy work miracles by stimulating economic activity. The argument goes: Not only do tax cuts create growth throughout the economy — thus boosting the fortunes of working people — but they also bolster state revenues and allow for balanced budgets, since people end up paying taxes on higher incomes.

But what really happens when you give these “job-creators” new-found, free money? They laugh and stick it into a Jumbo CD and mutter a sarcastic “thank-you” to the middle class for the generous freebies and funnel some of it back to the Republicans who bestowed these gifts upon them.

Debating the merits of this philosophy with then-Gov. Ronald Reagan in the 1980 Republican presidential primaries, Bush argued, “It just isn’t gonna work.” He was right. It didn’t work then: Budget deficits soared during the Reagan years. As tea party governors are learning, it isn’t working now either.

In Kansas, Brownback lowered tax rates for top earners by 26 percent. Now the state faces a $334 million budget , first-ever, deficit. Kansas’ public services are so emaciated that the State Supreme Court ruled the funding of the school system unconstitutional. Economic growth has stalled and the state’s employment growth currently ranks 34th in the nation. And yet, Brownback eked out another win and another shot at  destroying Kansas’ state-supported universities, public school systems, and middle class families.

“Brownback’s recent promise of 100,000 new private sector jobs in his next four years seems to be unrealistic,”Kansas City Star columnist Yael T. Abouhalkah, wrote in January. “That’s because the state would need to create 2,100 jobs a month while it’s been averaging close to 1,300 a month for his first four years in office.”

Efforts to address budget troubles by using voodoo economics will only impose new burdens on the working families that are already hit hard by the lackluster economies these leaders created. 

Wisconsin is experiencing similar woes from supply-side tax cuts and union busting. In 2013 the Federal Reserve ranked Wisconsin 49th in economic outlook and 44th in private-sector job growth. The only state faring worse than Kansas? Bobby Jindal’s decimated Louisiana’s ultra-conservative-run disaster. Wages fell 2.2 percent that year. Wisconsin is now raiding public employees’ retirement funds to make up for a budgetary shortfall of nearly $280 million. (Watch out U.S. Postal workers, yours is next). By contrast, neighboring Minnesota raised taxes on top earners in 2013 and now has one of the fastest growing economies in the nation. The state raised its minimum wage and balanced its budget without resorting to financial accounting games.

Good governance

The conservative tactic of attacking government during an election rarely translates into good governance. There’s a reason why anti-government rhetoric remains vague and abstract: The public is often horrified to see highways and bridges deteriorate, public schools close and fire departments face crippling cutbacks, police departments cracking under the strain of too much overtime, too little pay, and too many trigger-fingers.

Formerly insurgent anti-government governors are now recognizing this fact. Unfortunately, despite their scrambles to raise revenue, many are not going about this task responsibly. Rather than reversing the tax cuts for their top donors, they are implementing regressive measures that draw most heavily from middle-class families. For example, Michigan’s Snyder’s ballot initiative to increase infrastructure spending will be paid for with a sales-tax increase. This puts a heavy burden on families of modest means, who spend most of their incomes paying for basic necessities at retail stores. It’s often later written off to the public as “inflation”, and it’s a bold-faced lie.

Brownback is taking a page from Walker’s political playbook. Instead of asking his business friends to help address the state’s fiscal crisis, he is raiding a pot of money accumulated by middle-class workers. As in Wisconsin, Kansas’ tattered state budget is being mended with funds previously set aside for civil servants’ pension plans. Compensation that public employees have put into the system for decades is being drained to pay for top-bracket tax cuts but no new jobs.

That these governors now want to put their states on more stable financial grounds indicates that they are sobering up from their tea party euphoria. But gutting essential public services will only compound the economic woes of their constituents. Efforts to address budget troubles by using voodoo economics will only impose new burdens on the working families that are already hit hard by the lackluster economies these leaders created.

 

Harvey A. Gold